Health-plan choices: A tougher call

Tips for deciding on HMO or PPO as employee benefit

SAN FRANCISCO (CBS.MW) -- It's open-enrollment time and with health-care costs up 15 percent this year, everyone's looking hard at their medical expenses. Be forewarned: it's no longer as simple as opting for a cheap HMO over a more flexible PPO.

The plans now offered by health maintenance organizations and preferred provider organizations are increasingly alike, experts say, leaving no easy answer to which plan is right for you.

The only sure thing this year is that employees will see plan changes as employers pass on rising costs in the form of higher premiums, reduced benefits, or fewer plans from which to choose.

"The words to live by this enrollment period: You've got to pay attention. Wake up and pay attention," said Kenneth Sperling, health-care market leader at Hewitt Associates, an employee-benefits consulting firm to companies.

"For some people the rates will go up considerably, for other people their plans will change a lot, and other people won't see the plan they're in available next year," Sperling said.

Lines blurring

People tend to think of HMOs as cheaper, at a cost: You have a limited number of physicians to choose from, your primary doctor controls referrals to other specialists, and the HMO may restrict you to cheaper drugs. With PPOs, you may pay more out-of-pocket costs but you can usually see just about any doctor in your area.

PPOs' flexibility has proved popular: About half of insured workers have such plans, compared to the 26 percent currently covered by HMOs, according to a Kaiser Family Foundation survey.

But now, some HMOs offer more flexibility and some PPOs provide lower premiums in return for a more limited provider network, and that means workers can't eliminate any plan without perusing its benefits and costs carefully.

This year, a family covered by an employer-sponsored HMO paid an average of $163 per month, while a PPO cost $179 a month. But for a single person, the HMO was $38 monthly, compared to $36 with a PPO, according to the Kaiser Family Foundation.

"The arrangement of these plans is much more fluid than it used to be and that's why it's so important for employees to adequately assess the different options," said Erin Holve, senior policy analyst at the Kaiser Family Foundation, which conducts independent health policy research.

Different folks

In general, someone likely to have multiple medical claims or need many prescription drugs should choose an HMO, because out-of-pocket costs for doctor's visits and drugs are relatively low.

Someone who is perfectly healthy will likely be served well by the cheapest plan, which could be a bare-bones PPO. But health-care choices are rarely so simple.

"If you're an aging baby boomer with a couple of young children who tend to get ear infections and you've got drug expenses as well as doctor expenses, there's a little bit of work you have to do," Sperling said.

The following are some tips to help guide workers through their health-plan choices during open-enrollment period:

Assess your likely medical expenses for the coming year. Consider how many times you saw a doctor last year, how many prescriptions you had filled, etc. Then, using your current plan's updated prices, compare your costs across plans, Holve suggested.

Look at how each plan provides for emergency medical situations. What are its deductibles, maximum out-of-pocket costs, and maximum lifetime benefits? "If you were going to have a medical emergency, what costs might you be faced with?" Holve said. Then, your risk threshold will determine what plan is best. One person might be concerned about a son's potential soccer injuries, while another may think emergency-room visits unlikely.

If it's imperative that you keep your current provider, call both the insurer and the doctor's office to confirm she is covered under the plan, Holve said. Sometimes insurers' records are not up-to-date, or a doctor may stop seeing new clients. Even if you don't change plans this year, be aware that cost-cutting measures have led some insurers to eliminate some providers from plans.

Ask your company's human-resources department to give you an easy-to-read summary of your plan's changes. The information should be clear, comprehensive and easy to compare to other plans, said Kathleen Stoll, associate director of health policy at Families USA, a health-policy advocacy group.

If your plan's costs go up, find out if your doctor is a member of a cheaper plan offered by your employer, and consider switching plans, Sperling said.

Married couples should compare each spouse's benefits. Instead of one employer plan covering the whole family, you can often save money by having a plan that covers one adult and the kids, and having the other spouse covered as an individual on her own employer's plan, Sperling said.

Give yourself time to read through each plan's details. Last year, "the average employee spent about six minutes with their open enrollment materials," Sperling said. "This is not the year to do that."

Intraday Data provided by SIX Financial Information and subject to terms of use. Historical and current end-of-day data provided by SIX Financial Information. All quotes are in local exchange time. Real-time last sale data for U.S. stock quotes reflect trades reported through Nasdaq only. Intraday data delayed at least 15 minutes or per exchange requirements.